Study On The Application Of Activity-based Costing To Medical Appliance Industry

Medical appliance is one of the five health products under the management and supervision of the Food and Drug Administration Authorities. The requirements on the technology and quality of medical appliances are becoming increasingly higher with the constant improvement of people’s living standard. Cost leadership and differentiated decision-making determines the success of the enterprise in the fierce market competition. Traditional cost accounting method can not accurately distribute the ever-growing overhead expenses on R&D etc of modern medical appliance industry and may lead to the cost information distortion or cost control disability of the medical appliance enterprises or the management staff can not make the right decision, which may to a great extent restrain the development of enterprises. Activity-based costing, as an advanced cost accounting method based on the fact that activities consume resources and products consume activities, first makes an analysis of activities, traces the resources consumed in activities back to each activity through resource motives, then chooses reasonable motives of activities and distributes the activities to products, which fundamentally resolves the defects of traditional costing method. Activity-based costing is not only a method of cost accounting but moreover a means of cost control which identifies value-adding and non-value-adding activities through activities analysis to help the management staff control cost and master accurate cost information, lower the cost, make differentiated decisions and thus improve the competitiveness of the enterprise.This paper, based on the current status of cost accounting of the medical appliance industry, reveals the existing problems, analyzes the feasibility of improvement and takes Suzhou C Medical Appliance Company as the example to introduce in details how the enterprise conducts the activity-based costing procedures design, the specific operations and activity-based costing management. It is hoped that the study on the application of activity-based costing method to the medical appliance enterprises represented by the company could provide some reference for the implementation of activity-based costing method in the medial appliance industry.